Once the dust settled after Thursday’s decision of the Swiss Bank
National, worth a leisurely monitor processes that led to the
minimum abandon the euro exchange rate franc. Contrary to popular belief, no
it was a decision that “no one predicted.”
About the possibility of abolishing “pega” to
euro (ie. fixed exchange rate) in Switzerland discussed for some time. The
Last week, about the possibility hinted Professor Ernst Baltensperger
in an interview
granted “Neue Zürcher Zeitung”. Commented on the matter
American analysts, pointing to the huge costs and the risk of SNB intervention
the foreign exchange market.
The risk of sudden strengthening
franc also knew TwoNuggets newsletter subscribers, which the author Cynik9
proved to be a phenomenal sense of time, the day before the SNB decision in writing
about the possibility of breaking the franc to the euro. Bank analysts were surprised by who
mindlessly trust each message sent from the central bank.
The Swiss have done all the horse
December 18 SNB assured that it will be
defend the exchange rate of 1.20 francs per euro “with the utmost determination.” More January 12 (!) SNB Vice President Jean-Pierre
Danthine asserted that the “minimum
exchange rate must remain the foundation of our monetary policy. ” No
said only that three days later, these foundations will be plowed.
The SNB’s decision was likely to move ahead of the launch of presses
printing by the European Central Bank . Apparently, it is already a foregone conclusion that
The ECB will enter into the shoes of the Federal Reserve and starts
buy up government bonds of eurozone countries, paying tions newly wykreowanymi
money. European QE is likely to lead to a further decrease
trading the euro against the dollar. In this situation, the maintenance of the minimum rate
between the euro and t he franc would lead to a decline in the value of the franc against the “green”.
The rising cost of “eurowej leash”
Second, since November peg in
the form of 1.20 francs per euro has been subjected to increasing pressure on the market.
Capital scared escalation of the crisis in Russia and the possible exit of Greece from
Euro zone fled in the direction of “safe harbor” for which it is considered
Swiss currency. This means that SNB
probably have to spend more and more francs to defend the EUR / CHF .
Was it, in fact, we find only when there are statistics
monetary for December.
In theory, the exchange rate of the minimum defense was not for
SNB any problem. Because the Swiss could “print more” many francs as you
they want. But such a policy has its consequences. Firstly, the Swiss mountain rising money drives
bubble
speculative real estate market , which undermines the stability of the economy and
banking sector.
Secondly, due to the keeper
EUR / CHF SNB balance swells at the seams. At the end of November, its size
amounted to 525.3 billion francs, which was (at the then exchange rate of the dollar) approx. 78%
GDP of Switzerland. For three years, the SNB
doubled the amount of its assets – none of the major central banks do not
printed so quickly. As a result, the balance of the SNB is full bond zone countries
euro, which in the case of the severity of the crisis in the euro may prove to be
dangerous.
The Swiss will not die for euro
The decisive argument in favor of the euro was a break with the SNB
probably the attitude and outlook of the European currency . From May 2014
of the euro against the dollar has lost nearly 17% (!), reaching the lowest value since November
, 2003. Along with the euro losing too frank. When we look at the dollar to
franc, you can easily see that the franc back exactly to the point where it was
at the start of the depreciation of the euro against the dollar – that is up to approx. 0.88.
Looking in USD SNB
just tied the trajectory of the franc, cutting off the ballast in the form of walking on
bottom euros. But the scale of the strengthening of the franc probably exceeded expectations
Swiss authorities, who, like many economists, as a safe course
considered around 1.10 euro franc. It is possible that in the coming weeks
Helvetian currency exchange rate will stabilize in the range of 1.00-1.10 precisely euros per
franc.
Christopher Kolany
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